Coming in 2012: Revamped health plan summaries

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in Compensation and Benefits,Human Resources

A common gripe among employees is that they don’t understand their health care plans. As a result, they end up making mistakes and choosing plans that don’t meet their health care needs or budgets.

In fact, 42% of workers say they waste money each year because of mistakes made with their health insurance benefits, says a new Aflac survey of 2,200 U.S. workers.

The federal government aims to diminish confusion by changing the way employers explain health care plans to employees.

In August, the Obama administration proposed new rules that would require employers and health insurers to give health plan participants a clearer summary of their benefits in plain English.

The rules propose a new template for the Summary of Benefits and Coverage (SBC) that may be no longer than four, double-sided pages. The goal: Give employees a standard basis for comparing and choosing health care plans.

To that end, the summary would have to explain which expenses a health plan would cover for common scenarios, such as pregnancy, breast cancer and diabetes. Each explanation must cover premiums, deductibles and out-of-pocket costs for doctor visits, treatments and procedures. Explanations for additional diseases or conditions may be required in the future.  

The rules also mandate that em­ployees are given a glossary of basic health care plan terms, such as “deductible” and “out-of-pocket.” Additionally, employers would have to notify em­­ployees at least 60 days before modifying plans during the coverage year in effect.

The rules are scheduled to take effect in March 2012. Talk to your insurer to make sure your summary is in compliance.  

Disadvantages of these summaries: Premiums may rise because in­­­surers are likely to pass on the ad­­min­­is­­tra­­tive costs of preparing the new summaries. Careful planning is re­­quired because it takes longer to implement health care plan modifications. Em­­ployers can expect to spend more time (at least initially) answering employees’ questions about the summary of benefits.

Advantages: It will be easier for employees to make “apples to apples” comparisons between health care plans, meaning they’ll ask more informed questions when enrolling. Plus, em­­ployees who select the right plan and understand how to use it may remain healthier and more productive.

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